Partnering with a hard money lender

[Damir Kamber]

Greetings all,

I was approached few days ago by a hard money lender for an opportunity to partner on a deal. He is lending money to a buyer (real estate agent) and wants me to put up half of the funds. I have never done this before! Am I scared? Maybe...but who cares right. We went to see the property, maybe in a B- neighborhood, schools are 4s and 5s, and the buyer has it under contract for 33K (purchasing from Freddie Mac). My side of the deal is to put up 13K and get a return of 11% (monthly payout). "11%??" I said. Who wouldn't take 11% return and not change a single toilet. That would be me. 

I have decided to pass on the deal since my goal for 2016 is to buy a rental property. I currently have two rentals in the Atlanta Metro area (which neither of them were purchased as a deal) and would like to start adding to my portfolio. The 13K I would be tying for at least 2 years would significantly cut into my funds for the rental property. At the end of the day I feel like I am skipping a whole lot of experience by going into the hard money side of things without building my foundation first. My magic number is 25 rentals before I can consider quitting my job and I don't see myself accomplishing that by becoming a hard money lender without being in the trenches first. 

Please let me know your thoughts, I'm sure many of you have been on both investing sides.

Cheers,

Damir